What Do Real Estate Agents Have to Disclose When Using AI?

By Emily Terrell — Top Coach and Speaker at Tom Ferry International. Licensed since 2016. Closing 70+ deals/year while coaching agents nationwide.

Real estate agents must disclose AI use when the output could mislead a client — digitally altered listing images, AI-generated video, and automated valuations. Drafting help on emails and descriptions generally requires no disclosure. California’s AB 723 made image disclosure law on January 1, 2026. This guide gives you the three-tier test and the workflow.

Key Takeaways

• Disclosure is triggered by what the AI output represents, not by whether you used AI at all.
• California’s AB 723 has been in effect since January 1, 2026, and requires a disclosure statement plus access to the original unaltered image.
• Wisconsin follows in 2027, and New York has a pending bill covering video and immersive media.
• Buyers already assume you’re using AI, and they punish AI errors harder than human ones — so concealment buys you nothing and costs you everything if it surfaces.
• Blanket “I used AI” labels on every email are not required and are not the goal — precision is.

What is AI disclosure in real estate?

AI disclosure in real estate is the practice of telling consumers when artificial intelligence has changed what they see, or has produced an output they may rely on to make a decision. It applies to listing photos, listing video, virtual staging, automated valuations, and AI-assisted screening. It does not generally apply to using AI as a drafting or research assistant behind the scenes.

The distinction matters because the legal trigger is misrepresentation, not automation. A tool that helps you write faster isn’t a disclosure event. A tool that changes what a buyer believes about a property is.

Why this matters for real estate agents

Adoption is finished. The argument is over. Delta Media Group’s third annual Real Estate AI & Leadership Survey, covering more than 100 brokerage leaders at firms responsible for over two-thirds of U.S. transactions, found that 97% said their agents are using AI — up from 80% in 2024, with 82% of agents using it to write listing descriptions (Real Estate News, January 2026).

Consumers know. Cotality’s AI in Housing 2026 Report found that three in four buyers expect AI somewhere in the transaction, and 80% assume real estate agents specifically are using it (HousingWire, April 2026).

Here’s the part most agents miss: assumption is not acceptance. In the same report, U.S. trust in AI to help find a home fell from 30% in 2025 to 16% in 2026, while 68% of buyers said they want clear notification whenever AI generates a listing, price, or mortgage recommendation — and 61% of baby boomers said it should be a legal requirement (Cotality, “Trust, but verify,” April 2026).

“Buyers are not asking whether AI is involved — they assume it is.” — John Rogers, Chief Data and Analytics Officer, Cotality

Then there’s the finding that should decide your policy on its own. Cotality measured what it calls the trust cliff: 70% of buyers say a significant AI-generated listing error would reduce their trust in the platform, compared with 60% for the identical error made by a human agent — a ten-point penalty that holds across every generation surveyed (Cotality, “Trust, but verify,” April 2026). You don’t get the grace a human gets. Publish an AI mistake and it costs you more than the same mistake made by hand.

The compliance gap is measurable and it’s ugly. A Coraly study of just under 40,000 primary listing images from Zillow, Redfin, Realtor.com, and Homes.com found 10.8% showed evidence of digital alteration — sky replacement accounted for 69% of those — and more than 90% of altered images carried no visible disclosure in the image, caption, listing description, or adjacent text (HousingWire, June 2026).

That’s the number a plaintiff’s attorney reads. That’s also the number a state legislature reads.

The three tiers of AI use — and which ones you disclose

Most agents are trying to answer one question (“should I say I used AI?”) when there are actually three, and they have different answers. Sort every AI task into one of these tiers before you publish anything.

Tier 1: Assistance — no disclosure required

AI drafts your follow-up email. AI summarizes a market report. AI turns your voice memo into a listing description that you then verify line by line. AI builds your content calendar. This is the tier I break down step by step in how to train ChatGPT for real estate agents.

Nothing here changes what a client believes about a property. Nobody discloses spellcheck, and nobody discloses a transcription tool. You own the output the moment you publish it — which means you’re responsible for its accuracy under your state’s advertising rules regardless of what wrote the first draft.

Tier 2: Representation — disclose, and in some states it’s law

This is where the legal exposure lives. California’s Assembly Bill 723, effective January 1, 2026, requires brokers, salespersons, or those acting on their behalf to disclose when digitally altered images are used and to provide access to the original, unaltered versions — and it applies when software or AI adds, removes, or changes visible elements including furniture, appliances, flooring, landscaping, façades, floor plans, window views, or neighboring properties (HousingWire, June 2026).

California draws a workable line: lighting, cropping, sharpening, and color correction are permitted as long as they don’t change how the property actually looks (HousingWire, June 2026).

Other states are moving. Wisconsin’s 2025 Act 69, effective in 2027, requires disclosure when advertising is altered using technology in a way that creates a false or misleading impression, and its scope covers reels, animations, and generated video — not just photos. New York regulators have warned that AI-generated listing imagery can produce misleading representations, and a pending bill, S9584, would define “digital representations” to include images, video, and immersive media (HousingWire, June 2026).

Video deserves its own sentence. An AI-generated video that simulates a drone approach or a walkthrough built from still photographs presents movement that was never captured — the images may be real, but the experience is not (HousingWire, June 2026). If a buyer thinks they’re watching footage, that’s a disclosure event.

Tier 3: Judgment — disclose and verify with a human

Automated valuations, AI-assisted tenant or buyer screening, and any AI output presented as analysis rather than marketing. This tier carries the highest liability and the lowest consumer tolerance.

AI tools are research and communication tools, not valuation tools — a point I’ve covered in detail in why agents who don’t understand AVMs keep losing listing appointments. If an AI-generated number reaches a client, that client needs to know what produced it and what its limits are.

Fair housing sits on top of all three tiers. The Fair Housing Act applies to your advertising no matter who or what drafted it. AI is fluent, confident, and completely unaware that “perfect for young professionals” or “great family neighborhood” can read as steering on a protected class. Every AI-drafted description gets a fair housing read before it goes anywhere near the MLS.

What Texas agents need to know right now

Texas has no AB 723 equivalent. That is not the same as having no rules.

TREC’s advertising rules were built to cover the media agents actually use: an advertisement on social media complies only if the license holder links to a profile or separate page carrying the required information, and subsection (d) of Rule 535.155 sets out 20 specific examples of advertisements that may mislead the public — with TREC noting those examples are not the only ways an advertisement can be misleading. Chapter 1101.652(b)(23) of the Texas Occupations Code states plainly that a license holder’s advertising cannot be misleading (TREC).

Translation: an undisclosed AI-altered listing photo in Texas doesn’t need a dedicated AI statute to be a problem. It’s already a misleading advertisement. Read TREC’s guidance directly, and check your MLS rules separately — many MLS systems require “virtually staged” labels independent of state law.

This is general information, not legal advice. AI disclosure rules vary by state, MLS, and brokerage policy, and they are changing quickly. Confirm your obligations with your broker and a licensed attorney in your state before you change your workflow.

How I use this in my own business

I run 70+ transactions a year on systems, and AI touches most of my marketing workflow. Here’s exactly where the disclosure line falls in my own San Antonio practice.

My listing descriptions start as AI drafts built from my own showing notes and the actual property data. I rewrite, verify every claim against the seller’s disclosure and my own walkthrough, and run a fair housing pass. No disclosure — because nothing in that output changes what a buyer believes about the house.

My photo workflow is different. On a recent listing, that image carried a label directly on the photo. I keep the original and the altered version in the transaction file, every time, on every listing — even though Texas doesn’t currently require me to.

That’s not caution for its own sake. It’s a one-line habit that costs me nothing and removes an entire category of future problems.

The systems thinking here is the same as everything else I teach: build the workflow once, and compliance stops being a decision you make under pressure. It’s also the same trust math I break down in how to stop letting AI erase you — the agents who win are the ones both humans and machines can verify.

Common mistakes

Disclosing everything. Slapping “AI-assisted” on every email and caption isn’t compliance — it’s noise, and it trains clients to discount the label when it actually matters. Precision beats volume.

Assuming your state’s silence is permission. Most states haven’t passed an AI statute. Nearly all of them already prohibit misleading advertising, which is the same trap with a different name.

Burying the disclosure. A label that lives in a listing’s fine print, three clicks from the image, doesn’t do the job. Disclosure travels with the media it describes.

Skipping the fair housing reading. AI writes clean, confident copy that can carry protected-class implications you’d never write yourself. You’re liable for it either way.

Not keeping the originals. Coraly’s researchers called the compliance gap a workflow problem rather than a willingness problem — agents receive final JPEGs from photographers with no metadata and no record of what changed, and the originals sometimes get deleted after delivery (HousingWire, June 2026). Ask your photographer for originals in writing, before the shoot.

Treating an AI valuation as a CMA. AI produces text about numbers. It does not produce a defensible opinion of value anchored in local market data.

Frequently Asked Questions

Do real estate agents have to tell clients they used AI?

Not for general assistance. There’s no requirement to disclose that AI helped draft an email, summarize a report, or produce a first-pass listing description you then verified. Disclosure obligations attach to outputs that could mislead — altered images, simulated video, and automated valuations presented as analysis. The trigger is misrepresentation, not automation.

Is it illegal to use AI-generated listing photos?

Using them isn’t illegal. Using them without disclosure can be. In California, AB 723 has required a disclosure statement plus access to the original unaltered image since January 1, 2026, whenever software or AI adds, removes, or changes visible elements of a property. Basic lighting, cropping, and color correction that don’t change how the property looks are permitted without disclosure.

Do I have to disclose AI if I’m not in California?

Check three sources: your state statute, your MLS rules, and your brokerage policy. Most states have no AI-specific law yet, but nearly all prohibit misleading advertising — which covers an undisclosed altered photo regardless. Wisconsin’s rules take effect in 2027 and New York has pending legislation, so the answer where you practice is likely to change.

Does using ChatGPT to write a listing description require disclosure?

Generally no, provided you verify it. The description is your advertisement the moment you publish it, and you’re accountable for its accuracy under your state’s advertising rules no matter what drafted it. The real risk isn’t the tool — it’s publishing unverified claims about square footage, features, or conditions that the AI inferred rather than confirmed.

Can AI-generated listing descriptions violate fair housing laws?

Yes, and this is the most underestimated risk in the whole category. AI produces confident, polished language that can imply preference for a protected class — phrases like “perfect for young professionals” or “great family neighborhood” can read as steering. The Fair Housing Act applies to your advertising regardless of who or what wrote it. Every AI draft needs a fair housing review.

What should an AI disclosure actually say?

Plain language, placed with the media it describes. “Virtually staged. Furniture shown is not included.” “Image has been digitally altered. Original photo available at the link provided.” “Video created from listing photographs. No drone footage was captured.” Legal-department phrasing isn’t required and usually performs worse. The test is whether a buyer immediately understands what was real and what was generated.

Does AI disclosure hurt client trust?

Some research suggests labeling AI-generated marketing content can reduce perceived authenticity, and Cotality found buyers penalize AI errors about ten points harder than identical human errors. That’s why blanket disclosure is the wrong strategy. Disclose where a client could rely on the output to their detriment, and stay quiet about backend drafting assistance. Precision protects both your compliance position and your credibility.

Bring this to your team or event

Emily Terrell speaks at brokerage events, real estate conferences, and team trainings on AI, systems, and social media — the exact playbook in this post, delivered live to your audience. As a Top Coach and Speaker at Tom Ferry International and an active agent closing 70+ transactions a year, Emily speaks from the stage about what’s working right now, not theory. Recent stages include NAHREP and eXp Con.

Book Emily to speak at your next event: Email: eterrell@yourcoach.com Phone: (210) 400-9191 Web: coachemilyterrell.com

For real estate agents who want to implement this: Get the weekly real estate prompt library at weeklyrealestateprompts.com or follow @coachemilyterrell on Instagram for daily systems and AI breakdowns.